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TMI Blog2015 (10) TMI 2309X X X X Extracts X X X X X X X X Extracts X X X X ..... TAX APPEAL No.528 of 2015. "Whether the decision of ITAT is perverse in restricting the addition of 6.5% of unaccounted sales, despite the fact that AO has clearly noted that assessee has debited all the expenses in regular books of accounts and assessee has failed to prove otherwise at any stage?" 2. Since both these appeals arise out of a common order of the Tribunal and the parties are also common, the same were taken up for hearing together and are disposed of by this common judgment. 3. The assessment year is 2007-08 and the relevant accounting period is the previous year 2006-07. In this case, a survey action under section 133A of the Act was conducted at the business premises of the respondent assessee on 3.3.2008. Out of the five Directors of the assessee company, one of the Directors Shri Rajesh R. Bansal on behalf of the company, voluntarily admitted that the assessee company had earned unaccounted income to the tune of Rs. 13,01,00,000/- and promised to pay tax on the unaccounted income disclosed by way of admission. However, vide letter dated 4.5.2008 such disclosure came to be retracted. The Assessing Officer framed the assessment under sub-section (3) of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y submitting that the Tribunal has failed to appreciate that the Assessing Officer has considered the material on record, namely, data contained in the Laptop of Shri Sanjay Sudhrania wherein the accounts pertaining to processing charges received by the assessee company had been entered regularly. It was submitted that the Tribunal has failed to consider that the assessee had debited all expenses relating to unaccounted sales in its books of accounts without considering the unaccounted investment for making this unaccounted sales. It was pointed out that the Commissioner (Appeals) had erred in estimating the gross profit at 10% and the Tribunal had further erred in estimating the gross profit at 6.50%. It was submitted that the Assessing Officer having properly analysed the material had rightly made the addition of Rs. 4,20,73,972/- to the total income of the assessee company and that the Tribunal was not justified in estimating the gross profit at 6.50%. It was, accordingly, submitted that the appeals deserve consideration on the questions as proposed or as may be deemed fit by this court. 5. This court has considered the submissions advanced by the learned counsel for the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were submitted and thereby the existence of such expenditure was proved by the assessee and, therefore, it was unjustifiable to allow some of the expenditure, namely, discount of Rs. 51,31,203/- on estimate basis and to ignore the claim of the other expenditures. The Commissioner (Appeals) further found force in the arguments of the authorised representative that the co-existence of evidences of unaccounted income and unaccounted expenditure cannot be ignored in toto as the department cannot approbate and reprobate the same document at the same time. The Commissioner, however, noticed that the assessee had also failed to prove categorically that the impugned unaccounted transactions as reflected in the combined books of accounts maintained on the laptop were not accounted for in the regular books of accounts. However, at the same time, the Assessing Officer could not establish with evidence that the assessee's claim was incorrect and all the transactions of unaccounted expenditure were incorporated in the regular books of accounts. He was, therefore, of the view that if on one hand it is not justifiable to reject the claim of unaccounted expenditure in toto but at the same time, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Tribunal noted that it was not the case of the revenue that the data found in the Laptop showed the actual net income of the assessee was more by Rs. 4,20,73,972/- than the income disclosed in the return of income. The Tribunal observed that it is an established position of law that even when the undisclosed sale or receipt is found, then also only the income embedded in such undisclosed receipt can be brought to tax. Reliance was placed upon the decision of this court in the case of CIT v. Samir Synthetics Mill, (2010) 326 ITR 410 (Guj.), wherein it has been held that income from suppressed sale should be determined by estimating the gross profit of the assessee as well as upon the decision of this court in the case of CIT v. President Industries, (2012) 258 ITR 654 (Guj.), wherein it has been held that the entire sales cannot be added as income of the assessee but addition can be made only to the extent of estimated profits embedded in the sales. The Tribunal, accordingly, did not find any merit in the appeal preferred by the revenue and dismissed the same. 9. Thus, in the assessee's appeal challenging the rate of gross profit estimated at 10% on the ground that it was on th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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